Changes to Superannuation Contributions
- May 2, 2017
- Posted by: Quarles Business and Financial Strategists
- Category: Superannuation
Are you prepared for the changes coming for Superannuation contributions?
The changes in superannuation that were announced as part of the 2016 Federal Budget will come into effect this year, so make sure you and your business are fully prepared for the transition. Find out a little bit about some of the changes to Superannuation that will be effective as of 1st of July and what it means for your nest egg.
Changes to Superannuation contributions from 1st of July 2017:
- The amount you can contribute decreases from $180,000 to $100,000 a year.
- The “bring forward” rule that allows you to make three years of contributions in one hit, will reduce from $540,000 to $300,000.
- If you’re over 50 you can contribute $35,000 before 1 July, and if you’re under 50 it’s $30,000.
- The income threshold will be lowered from $300,000 a year to $250,000.
- The annual non-concessional contribution cap will be reduced from $180,000 to $100,000 per year, remaining available to individuals between 65 and 74 years old if they meet the work test.
- The new concessional contributions cap is $25,000 for everyone and will be indexed in line with average weekly ordinary time earnings, in increments of $2,500.
If you have a superannuation balance close to $1.6 million
If you’d like to contribute bigger amounts into your super, you only have until the 1st of July 2017 to do so. This is vital if your balance is already close to $1.6 million, as after the 1st of July you cannot make after-tax contributions if you have more than $1.6 million. You can, however, still salary-sacrifice or make pre-tax contributions.
If you have a superannuation balance of less than $1.6 million
Those not near the $1.6 million cap who salary sacrifice, will only be able to salary sacrifice $25,000 a year, including company super contributions made on your behalf by your employer.
You’ll still be able to claim a tax deduction on all personal contributions to super even if you’re self-employed or in part-time work, which applies to everyone under 75.
Superannuation can be a daunting topic, especially with the laws around it changing. We here at Quarles are the Super experts and would be glad to help with any questions you may have about your super and how it may be effected by these changes.